Duane Reade rings up 2Q sales gains

NEW YORK – Duane Reade Holdings Inc. generated solid revenue gains for its fiscal 2009 second quarter, including an uptick in same-store sales.

The drug store chain said Wednesday that total sales rose 6.1% to $479.1 million in the quarter ended June 27. Retail store sales, which exclude pharmacy resale activity, increased 4.2% to $450.3 million.

Same-store sales, meanwhile, edged up 1.7% in the quarter, reflecting a front-end same-store gain of 0.2% and a pharmacy same-store gain of 3.6%.

On the earnings side, Duane Reade reported that adjusted FIFO EBITDA (earnings before interest, taxes, depreciation, amortization and other charges and credits) increased 6.3% to $26.5 million in the 2009 second quarter from $24.9 million a year earlier.

Operating income in the quarter came in at $1.2 million, compared with an operating loss of $0.2 million in the prior-year period. The company attributed the improvement mainly to the increase in adjusted FIFO EBITDA.

In the second quarter, Duane Reade posted a net loss of $11.6 million, down from $12.1 million a year earlier. The improvement is attributable to the increase in operating income and was partially offset by a rise in interest expense of $0.9 million, the company said.

At the quarter's end, the company's total debt dipped to $554.5 million, reflecting a decrease of $1.1 million from the balance at the end of fiscal 2008.

"We are encouraged by our continued solid performance despite a weak external environment and are also pleased with our 6.3% increase in adjusted FIFO EBITDA," chairman and chief executive officer John Lederer said in a statement.

"We made significant progress on the transformation of our business during the quarter and continue to be pleased with the very strong performance of our new and transformed store locations," Lederer noted. "The customer response to our improved offering and store design remains exceedingly positive, with an expanding level of awareness of the improvements we have made. We are encouraged by this momentum and remain committed to better serving New Yorkers as we aim to become a destination brand."

Duane Reade said it opened three new stores and closed two stores in the 2009 second quarter. The chain operated 253 stores at the end of the quarter, up from 241 stores a year earlier.